Gold prices find optimism before US CPI report, that may be wishful thinking
Gold prices trade optimistic before highly anticipated US CPI; an elevated core reading would likely keep the Fed hawkish and XAU/USD key falling trendline from March was reinforced.
Gold prices trade optimistic before highly anticipated US CPI; an elevated core reading would likely keep the Fed hawkish and XAU/USD key falling trendline from March was reinforced.
Gold prices aimed slightly higher over the past 24 hours, seeing most of the boost from Wednesday’s Wall Street trading session. There, the minutes from the September FOMC monetary policy announcement showed that ‘several’ members saw a need to calibrate tightening to mitigate risks. Aside from that, there was not much of a surprise. The same story goes, further policy hikes are likely in the cards.
What is going to be more important than the FOMC minutes is Thursday’s US inflation report. The headline rate of inflation is seen weakening from 8.3% y/y to 8.1%. More worryingly for the Fed, the core gauge, which strips out volatile food and energy prices, is seen climbing from 6.3% to 6.5%. A key source of this push is likely coming from rising rents, which is contributing to the largest weight of the metric - housing.
Looking at the Citi Economic Surprise index tracking the US, the gauge has been climbing since June. This has been increasingly suggesting that economists have been underestimating the health and vigor of the economy. As such, this may open the door to another upside surprise in the data. That will likely not bode well for gold.
A 75-basis point Fed rate hike is largely priced in for November, followed by another 50 in December. A strong inflation print could boost the latter to 75. That may in turn boost the US dollar and Treasury yields. For anti-fiat gold prices, that would likely spell disaster. With that in mind, what are key technical levels to watch ahead of the US CPI report?
Gold technical analysis
In the event of a downward path ahead, the September low at 1614 is a key suspect for support. Confirming a breakout under this price could open the door to downtrend resumption, as well as the lowest point since March 2020. On the flip side, a push higher places the focus on the falling trendline from March. The latter could reinstate the dominant downside focus.
XAU/USD daily chart
This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.